Alert February 14, 2013

2/14/13: MGC Weekly Meeting Summary

On February 14, 2013, members of Goodwin Procter's Gaming, Gambling & Sweepstakes Practice attended another public meeting of the Massachusetts Gaming Commission.

Administration

    Personnel Update

  • The Commission is currently interviewing candidates for various open positions.

    License Fee Discussion

  • The gaming statute provides that the Category 1 license fee shall not be less than $85 million and the Category 2 license fee not less than $25 million. These fees will be spent in accordance with the formula set forth in the statute.
  • The Commission discussed when the license fees should be collected—when the license is awarded or when all or some of the conditions are fulfilled. The statute states that the license fee is to be paid 30 days after the license is awarded and that with respect to Category 1 license fees the licensee must place 10% of the fee into an escrow account. The Commission discussed practical problems with delaying the collection of license fees.
  • Gaming consultants have said that the license fee is always collected upfront and is non-refundable.
  • The license fee should be paid upfront, but if the developer cannot go forward with the project (through no fault of its own), the license should be given to another developer and the fee paid by the initial licensee should be refunded. This issue requires clarification through a legislative amendment. A possible solution is for the Commission to return the license fee within 18 months to the original licensee upon receipt of the deposit of the license fee by the successor licensee.
  • The Commission analyzed the legislative intent behind this provision and specifically asked whether it would it be fair to keep the licensee’s deposit even if the latter cannot move forward with development through no fault of its own.
  • The Commission will submit this question for comment. The Commission will re-visit this question in two weeks and review submitted comments.

Public Education and Information

    Report from Ombudsman

  • The Ombudsman received 25 comments in response to developing the definition of “Surrounding Community” and evaluating if there is a need for amendment with respect to disputes and dispute resolutions.
  • The Ombudsman continues to receive requests for community disbursements and is beginning to process those requests.
  • Comments submitted suggest that the Commission needs to be mindful of the differences between Category 1 and Category 2 applicants when recommending evaluation criteria.
  • In one month, the Commission will have a discussion about how to handle “Region C.” The next meeting will discuss if the Commission wants to open this issue up to public comment and discussion.

    Discussion of preliminary evaluation criteria matrix

  • The criteria matrix lays out the criteria for evaluating applications and what evidence/studies applicants need to provide when submitting an application.
  • Five major categories (each of which includes sub-topics) will be used to evaluate applications. Those five categories are (i) revenue generation; (ii) employment; (iii) goods and services; (iv) site design; and (v) mitigation.
  • The Commission will soon post a draft of the evaluation criteria and request public comment.
  • Next steps will include: (i) drafting the application form; (ii) determining the “weighting mechanism” to assign importance to each criteria; and (iii) determining the  process, workflow, timeline and who will evaluate each criteria.
  • Many factors will be considered when evaluating applications, including the size of the development, innovative ideas to attract local and out-of-state tourism, track-record/historical data in each category, labor relations and retention rates.

Regulation Update

    Key policy questions; posting

  • “Key policy questions” sessions held in January resulted in the criteria matrix which will be posted on the Commission’s website today.
  • Phase 2 regulations policy questions are still being coordinated.

Investigations and Enforcement Bureau (“IEB”)

    Scope of licensing & Investigations

  • The IEB has heard back from two applicants. One applicant will be able to meet the February 19, 2013 deadline for identifying which license category it is applying for. The other applicant has expressed concern with meeting that deadline. Ongoing communication with applicants is underway in the interest of being fair to both applicants.
  • The Commission asked whether it is fair that one party will submit by the Feb. 19 deadline but the other applicant is able to submit later on. The second applicant has legitimate concerns which the first applicant does not have, and therefore it should not be an issue which renders the decision-making process unfair. The first party just needs to be made aware of other party’s delay in submitting its declaration.
  • The decision will be made on February 21, 2013, unless the parties’ submissions arrive sooner.
  • Background investigations are underway and the State Police has also been reviewing public record requests.
  • The State Police has reviewed redacted applications and has found that certain applicants have either over or under redacted their applications. Applicants will be notified of any discrepancies. If an applicant wishes to have further redactions made, the applicant needs to submit a written request for additional redactions.
  • The Commission proposes that the IEB director make the decision with respect to further redactions in coordination with the legal department. The Commission approved this proposal unanimously. Therefore, any decisions regarding requests for additional confidentiality shall be made by the IEB director in connection with the legal department and any such decisions may be appealed to the full Commission.
  • This issue will be open for public comment for one more week. Certain comments on this issue were already received during the past week.

The next meeting will be on Thursday, Feb. 21 at 1 p.m., at the Division of Insurance 1st Floor, Meeting Room E, 1000 Washington St., Boston, Mass.